Is Your Current Method of Finding Deals, Coughing Up Blood?

dogFrom Tom Nardone, The Millionaire Mailman

As we look back on 2013, many parts of the nation that were having slow real estate sales in 2012 have made a clear rebound in 2013.

And now that the real estate markets are heading up, everyone wants into the game.

This has created more competition for even the most seasoned real estate investors, to find really good deals below the market.

Even if your market has slowed down a bit in the last few months, it’s still a whole lot easier to make money in a flat market, as opposed to a market that is free falling, like it was in 2008-2010.

With hindsight being 20/20, we can see that when the large Wall Street in vestment firms like Blackstone decided to stick their toe in the water, then all the big firms wanted in…

…and all that REO inventory that banks had dried up in very short while.

In my area of South Florida, we have a lot immigrant labor (that have cash money to put down and close the deal) that is willing to work very hard physically and do their own rehab labor, for a very small profit.

For example, in my area, on a 100,000 house, I would still not pay more than about $60,000, providing the house did not need very much work.  If I were to have my rehab crew do a light rehab of about 10,000, then after holding and closing costs I would expect to net approximately a 20-25K profit.

The hard working newbies coming into the business today are willing to pay more for that same house, and after all that work, they are happy to walk away with $8-10K profit.

I have never been a proponent of buying a $100K house to make $8-10K profit, and I recommend you do not either.

It’s just too thin of a deal.   In the event something goes wrong, you can wind up losing money attempting to work on such a small profit margin.

A $10K profit should be the margin you make on a house you buy for $20,000 – NOT $100,000!

The good news here, is that you can make a very good living selling wholesaling deals to these newbie investors in your market that are paying too much, because they do not have the buying skills, or lack cultural skills to negotiate.

With more people trying to market for motivated sellers in my market, it has pushed me to target more creative lists with my postcard marketing then I have targeted in the past.  Truly motivated sellers exist, where pain of ownership is abundant.

Here is what I mean, as I share two of these unique sources with you:

ouchPain in the Ownership

The first list I hit is crossing the Notice of Default list with the Probate list.

Always remember: 

What motivates someone to sell their house cheap, are the Uncomfortable Circumstances Surrounding the Ownership of the Property.

If you have a house that is on Probate, and ALSO in foreclosure, then you have a lot of Uncomfortable Circumstances surrounding the sellers ownership of the property.

There may not be a lot of houses that show up in your initial count.  In my area, out of 1Million+ people, there are only about 400 per month that meet this search criteria.  So you may have to also target your surrounding counties, to raise the count of your list.

Landlord Eviction Case Filing List

Another list I’m testing in January, is the landlord eviction case filing list.  This is a hard list to get.  I am paying someone to go to the courthouse and compile the data for me.

In this list, there are about 3,000 cases per month filed.

One third is lawyers, one third is management companies, and the last third is the one I am interested in. 

It’s the Mom & Pop filed, or person-to-person evictions.

This runs from 500 to 1,000 cases per month.

Many of the addresses are out of town owners. 

So once again.  There is Uncomfortable Circumstances Surrounding the ownership of the property.

Tom NardoneThe harder the list is to get, the better your catch will be because there are fewer investors fishing in that pond.

If your current marketing is coughing up blood, test some of these lists, and see how they pull in your area.

What do you think?

Enjoy the Journey,

Tom

PS. Need a mentor?

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